Runes Protocol Taking Over Bitcoin Network
The crypto market is recovering from a recent price drop, but some big names like Bitcoin, Solana, Ethereum, and Cardano are still experiencing slowdowns. This price drop has impacted on-chain activity, but there’s a new player in the game: the Runes Protocol.
Runes Dominates Bitcoin Transactions
Runes Protocol, which is a new token minting standard on the Bitcoin network, claims that it’s responsible for a whopping 69.1% of all Bitcoin transactions in the past 24 hours. This means that less than 40% of transactions were for traditional Bitcoin use cases, like moving funds between addresses.
Taking Advantage of Taproot
This rise of Runes is linked to the Bitcoin Taproot upgrade, which was intended to improve Bitcoin’s scalability and privacy. However, the upgrade inadvertently created a way for users to store files, like images or audio, on-chain.
This opened the door for inscriptions, which boomed in 2021 during the NFT boom. After the Bitcoin Halving in April 2023, more Runes have been “minted” on-chain, despite the number of Bitcoin transactions actually decreasing in the last three months.
Runes: The New Standard for Inscription
Runes allows users to create NFT-like inscriptions on Bitcoin by leveraging the network’s UTXO model. It offers several improvements over the existing BRC-20 standard, including a shorter ticker symbol limit and streamlined token minting. This results in a smaller “on-chain footprint,” reducing spam and making it more efficient.
Runes and Transaction Fees
The surge in inscriptions has caused Bitcoin transaction fees to increase, but they’re still lower than the peak seen in April 2023 when users were frantically inscribing items on the Halving block. While some users are unhappy about the rising fees, Bitcoin miners are benefiting as they receive more revenue from the increased transactions.
The Future of Runes
Whether Runes will continue to dominate Bitcoin transactions remains to be seen. But it’s clear that this new protocol is having a significant impact on the Bitcoin network, and it’ll be interesting to see how it evolves in the future.
**Links:**
* [Runes Protocol](https://runes.fi/)
* [BRC-20](https://github.com/BRCv2/BRC-20)
* [Bitcoin](https://bitcoin.org/)
* [Taproot](https://en.bitcoin.it/wiki/Taproot)
